eCommerce and out-of-home channels aid Nestlé's organic growth

According to Nestlé’s latest financial statement, its organic growth reached 8.1%, supported by momentum in retail sales, a return to growth in out-of-home channels, increased pricing and market share gains. By channel, organic growth in retail sales was 7.3%.

At the same time, eCommerce sales grew by 19.2%, reaching 14.6% of total Group sales, with strong momentum in most categories particularly coffee, Purina PetCare and culinary.  

Organic growth in out-of-home channels was 21.3%, helped by the easing of movement restrictions in some geographies.

Mark Schneider, Nestlé CEO, said organic growth was strong across most geographies and categories, with robust momentum in retail sales and a return to growth in out-of-home channels. “Through fast-paced innovation, strong brand support, increased digitalisation and stringent portfolio management we have built the foundation for delivering consistent mid single-digit organic growth for years to come,” he said.

“The expansion of our partnership with Starbucks into ready-to-drink coffee will open new opportunities in a fast-growing segment. Our portfolio choices, strong execution and decisive actions on sustainability enable us to create value for all stakeholders,” he added.

Total reported sales increased by 1.5% to US$46bn and growth was broad-based across most geographies, said the company. However, the largest contributor to organic growth was coffee, fueled by strong demand for the three main brands Nescafé, Nespresso and Starbucks. Starbucks products posted 16.7% growth, with sales reaching US$1.545 billion across 79 markets.  On July 26, 2021, Nestlé and Starbucks strengthened their collaboration to bring ready-to-drink coffee beverages to select markets across Southeast Asia, Oceania and Latin America.

Meanwhile, Purina PetCare saw double-digit growth led by science-based and premium brands Purina Pro Plan, Purina ONE and Felix, as well as veterinary products. Sales in Nestlé Health Science grew at a double-digit rate, reflecting strong demand for vitamins, minerals and supplements and healthy-aging products.

Prepared dishes and cooking aids posted high single-digit growth, based on strong demand for Maggi and Stouffer's. Vegetarian and plant-based food offerings continued to see strong double-digit growth, led by Garden Gourmet. Dairy reported high single-digit growth, led by fortified milk, coffee creamers and ice cream. Confectionery recorded double-digit growth, supported by a strong sales development in impulse products. Water returned to positive growth, led by international premium brands S. Pellegrino and Perrier.

However, infant nutrition saw a sales decrease, impacted by lower birth rates in the context of the pandemic.

Zone Asia, Oceania and sub-Saharan Africa saw organic growth of 6.8%. Most categories gained market share, particularly pet food, coffee, confectionery and culinary.

China recorded double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. The largest growth contributor was Nestlé Professional, with sales exceeding 2019 levels. Coffee, culinary, dairy and Purina PetCare all grew at strong double-digit rates but infant nutrition posted a sales decrease, with market shares declining but slowly stabilising.

Southeast Asia saw slightly negative growth in a difficult economic environment.

High single-digit growth in Malaysia and Vietnam was offset by a sales decrease in the Philippines due to a high base of comparison in 2020. Sales in confectionery and ice cream grew at a double-digit rate, with particularly strong momentum in Malaysia. Dairy saw mid single-digit growth, led by strong demand for fortified milk.

South Asia reported double-digit growth, with continued strong momentum in eCommerce. Growth was broad-based across most categories, led by Maggi, KitKat and Nescafé. Infant Nutrition posted negative growth and continued to gain market share in South Asia and Africa.

Separately, the company is in the midst of a media review for Singapore and Malaysia and will invite several agencies to submit their credentials. The winning agency will be announced in the third quarter of this year. The review will involve a re-examination of ways to manage media strategy, planning and buying in line with rapidly-changing digital platforms and evolving media landscape and agencies.

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